Page 1 of 12 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission file number 1-6544 SYSCO CORPORATION (Exact name of registrant as specified in its charter) Delaware 74-1648137 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 1390 Enclave Parkway Houston, Texas 77077-2099 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: (713) 584-1390 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] 182,211,874 shares of common stock were outstanding as of October 27, 1995.
2 PART I. FINANCIAL INFORMATION --------------------------------------------------- Item 1. Financial Statements The following consolidated financial statements have been prepared by the Company, without audit, with the exception of the July 1, 1995 consolidated balance sheet which was taken from the audited financial statements included in the Company's Fiscal 1995 Annual Report on Form 10-K. The financial statements include consolidated balance sheets, consolidated results of operations and consolidated cash flows. In the opinion of management, all adjustments, which consist of normal recurring adjustments, necessary to present fairly the financial position, results of operations and cash flows for all periods presented, have been made. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's Fiscal 1995 Annual Report on Form 10-K. A review of the financial information herein has been made by Arthur Andersen LLP, independent public accountants, in accordance with established professional standards and procedures for such a review. A letter from Arthur Andersen LLP concerning their review is included as Exhibit 15.
3 <TABLE> SYSCO CORPORATION and its Consolidated Subsidiaries CONSOLIDATED BALANCE SHEETS (In Thousands Except for Share Data) <CAPTION> Sept. 30, July 1, Oct. 1, 1995 1995 1994 ---------- --------- ----------- (Unaudited) (Audited) (Unaudited) ASSETS ---------- <S> <C> <C> <C> Current assets Cash $ 90,265 $ 133,886 $ 75,481 Accounts and notes receivable, less allowances of $22,023, $16,001 and $22,861 1,037,871 932,533 935,671 Inventories 730,550 667,861 672,385 Deferred taxes 33,851 33,935 36,508 Prepaid expenses 22,950 18,685 20,717 ---------- ---------- ---------- Total current assets 1,915,487 1,786,900 1,740,762 Plant and equipment at cost, less depreciation 926,720 896,079 826,065 Goodwill and intangibles, less amortization 256,253 258,206 264,005 Other assets 158,090 153,506 139,685 ---------- ---------- ---------- Total assets $3,256,550 $3,094,691 $2,970,517 ========== ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ Current liabilities Notes payable $ 22,190 $ 1,181 $ 35,771 Accounts payable 806,844 708,380 705,454 Accrued expenses 188,116 206,131 163,850 Accrued income taxes 52,917 22,462 53,845 Current maturities of long-term debt 6,925 6,569 5,752 ---------- --------- ---------- Total current liabilities 1,076,992 944,723 964,672 Long-term debt 535,591 541,556 535,425 Deferred taxes 204,515 204,809 188,169 Shareholders' equity Preferred stock, par value $1 per share Authorized 1,500,000 shares; issued none --- --- --- Common stock, par value $1 per share Authorized 500,000,000 shares; issued 191,293,725, 191,294 191,294 191,294 Paid-in capital 49,047 48,674 52,955 Retained earnings 1,425,444 1,379,405 1,242,608 ---------- ---------- ---------- 1,665,785 1,619,373 1,486,857 Less cost of treasury stock, 8,762,008, 8,429,203 and 7,986,583 shares 226,333 215,770 204,606 ---------- ---------- ---------- Total shareholders' equity 1,439,452 1,403,603 1,282,251 ---------- ---------- ---------- Total liabilities and shareholders' equity $3,256,550 $3,094,691 $2,970,517 ========== ========== ========== <FN> Note: The July 1, 1995 balance sheet has been taken from the audited financial statements at that date. </TABLE>
4 <TABLE> SYSCO Corporation and its Consolidated Subsidiaries CONSOLIDATED RESULTS OF OPERATIONS (Unaudited) (In Thousands Except for Share Data) 13-Week Period Ended ---------------------------- Sept. 30, Oct. 1, 1995 1994 ------------ ----------- <s) <C> <C> Sales $ 3,291,910 $ 2,983,096 Costs and expenses Cost of sales 2,704,658 2,448,788 Operating expenses 469,847 429,591 Interest expense 9,372 8,453 Other income, net (444) (528) ------------ ----------- Total costs and expenses 3,183,433 2,886,304 ------------ ----------- Earnings before income taxes 108,477 96,792 Income taxes 42,306 38,426 ------------ ------------ Net earnings $ 66,171 $ 58,366 ============ ============ Average number of shares outstanding 182,791,952 183,295,130 ============ ============ Earnings per share $ 0.36 $ 0.32 ============ ============ Dividends paid per common share $ 0.11 $ 0.09 ============ ============ </TABLE>
5 <TABLE> SYSCO CORPORATION and its Consolidated Subsidiaries CONSOLIDATED CASH FLOWS - (Unaudited) (In Thousands) <CAPTION> 13- Week Period Ended ------------------------ Sept. 30, Oct. 1, 1995 1994 -------- ---------- <S> <C> <C> Cash flows from operating activities: Net earnings $ 66,171 $ 58,366 Add non-cash items: Depreciation and amortization 33,916 31,819 Interest on Liquid Yield Option Notes 1,350 1,466 Deferred tax provision (210) 4,204 Provision for losses on accounts receivable 4,631 5,099 Additional investment in certain assets and liabilities net of effect of business acquired: (Increase) in receivables (109,969) (84,322) (Increase) in inventories (62,689) (70,391) (Increase) in prepaid expenses (4,265) (4,337) Increase in accounts payable 98,464 73,081 (Decrease) in accrued expenses (18,015) (12,193) Increase in accrued income taxes 30,455 24,677 (Increase) in other assets (5,969) (12,237) -------- -------- Net cash provided by operating activities 33,870 15,232 -------- -------- Cash flows from investing activities: Additions to plant and equipment (61,469) (37,975) Proceeds from sales of plant and equipment 250 719 -------- -------- Net cash used for investing activities (61,219) (37,256) -------- -------- Cash flows from financing activities: Bank and commercial paper borrowings 11,018 28,877 Other debt borrowings (repayments) 3,041 (1,084) Common stock reissued from treasury 11,415 12,721 Treasury stock purchases (21,614) (13,251) Dividends paid (20,132) (16,493) -------- -------- Net cash (used for) provided by financing activities (16,272) 10,770 -------- -------- Net decrease in cash (43,621) (11,254) Cash at beginning of period 133,886 86,735 -------- -------- Cash at end of period $ 90,265 $ 75,481 ======== ======== Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 4,724 $ 6,128 Income taxes 10,688 8,928 </TABLE>
6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources ------------------------------- The liquidity and capital resources discussion included on page 11 of the Company's Fiscal 1995 Annual Report on Form 10-K remains applicable, other than the common stock repurchase program described below. In Fiscal 1992, the Company began a common stock repurchase program and purchased 8,000,000 shares in Fiscal 1992 and 1993. In September 1993, the Board of Directors authorized an additional 10,000,000 shares to be purchased under its stock repurchase program. Under this program, 3,000,000 shares were purchased in Fiscal 1994, 2,100,000 shares in Fiscal 1995 and 766,000 shares in the first quarter of Fiscal 1996. Results of Operations --------------------- Sales and cost of sales increased 10.4% during the first quarter of Fiscal 1996 over the same quarter of the prior year. Operating expenses for the periods presented remained approximately the same as a percent of sales. Interest expense in the current period increased over the prior period primarily due to rates. Income taxes for the current period reflect an effective rate of 39.0% as compared to 39.7% in the prior year. The rate reduction results from the effects of several tax savings initiatives. Increases in pretax earnings, net earnings and earnings per share for the periods shown resulted from a combination of the above factors.
7 PART II. OTHER INFORMATION ------------------------- Item 6. Exhibits and Reports on Form 8-K (a) Exhibit 11, Statement re computation of per share earnings. Exhibit 15, Letter from Arthur Andersen LLP dated November 9, 1995, re unaudited financial statements. Exhibit 27, Financial data schedule. (b) No reports on Form 8-K have been filed during the quarter for which this report is filed.
8 SIGNATURES ------------------ Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. SYSCO CORPORATION (Registrant) By /s/ JOHN K. STUBBLEFIELD, JR. ----------------------------- John K. Stubblefield, Jr. Senior Vice President and Chief Financial Officer Date: November 9, 1995
9 <TABLE> EXHIBIT INDEX ---------------------- <CAPTION> SEQUENTIAL NO. DESCRIPTION PAGE NUMBER - - ----- ----------------------------------------- ------------- <S> <C> <C> 11 SYSCO Corporation and its Consolidated Subsidiaries statement re computation of per share earnings 10 15 Letter from Arthur Andersen LLP dated November 9, 1995, re unaudited financial statements 11 27 SYSCO Corporation and its Consolidated Subsidiaries financial data schedule 12 </TABLE>